Bank of China 'shuts North Korea account'

The state-owned Bank of China has reportedly shut the account of a North Korean bank accused by the United States of supporting the North's nuclear programme.

A security guard patrols outside the headquarters of the Bank of China in the Xidan shopping area of Beijing. The state-owned Bank of China has shut the account of a North Korean bankPhoto: AFP/Getty Images

By AFP

2:44PM BST 07 May 2013

The closure would be the first openly acknowledged move by an institution in China – the North's key backer – against North Korean interests in the current stand-off, which escalated in February with Pyongyang's third atomic test.

But the details of the move were not revealed, and an analyst warned it would not likely contravene China's long-standing approach of supporting its unruly neighbour to avoid provoking regional instability.

"The Foreign Trade Bank of North Korea, the country's main foreign-exchange bank, has been told its account has been closed," Dow Jones reported, citing a statement from the Chinese financial institution.

The Bank of China is one of the country's biggest state-owned banks and is subject to political directives from Chinese authorities.

It has urged China – which is the North's largest trade partner and biggest food and energy supplier – to do more to contain its smaller neighbour.

When US Secretary of State John Kerry visited Beijing last month, the two countries vowed to work together to try to ease tensions on the Korean peninsula, but gave no details.

Kerry said there would be "very focused continued high-level discussions about the ways to fill in any blanks" and that he wanted to ensure pledges were "not just rhetoric".

US Treasury undersecretary David Cohen also visited Beijing in March soon after the new sanctions were announced to discuss how they might be implemented.

Beijing has supported separate United Nations sanctions on the North, which were also expanded after the February test.

But it has also said sanctions are not the "fundamental way" to resolve the crisis, and has tended to avoid antagonising Pyongyang for fear of provoking an overreaction and destabilising the region.

China's overarching aim with North Korea is to avoid provoking instability that could bring refugees flooding across the border, an enhanced US military presence in the region, or ultimately even a united pro-US Korean peninsula.

That calculus was unlikely to change even if China took some steps in support of Western-backed sanctions, said Stephanie Kleine-Ahlbrandt, the Beijing-based director of Northeast Asia for the International Crisis Group.

"I think that this is a highly visible thing that will get them a lot of points with the Americans, with the international community," she said.

"But I think it's impossible to judge its significance until we understand what it actually entails.

"China is simply not going to go very far because it prizes stability over denuclearisation, and it has different aims on the peninsula than the US does."

In one indication of China's support for North Korea, trade between the two countries nearly tripled in the five years to 2011 to $5.6 billion, figures compiled by the South Korean government showed last December.

China accounted for 70.1 per cent of the North's entire external trade of $8.0 billion, up from 41.7 per cent in 2007.

Beijing repeatedly urged calm in the weeks following the last nuclear test, as tensions spiked with Pyongyang threatening nuclear war against South Korea and the US while those two countries held joint military exercises.

But in a possible signal of easing tensions, the North on Tuesday took a major step back from a planned missile test, even as Pyongyang and Seoul exchanged fresh threats of swift military retaliation to any provocation.

A US defence official said two North Korean missiles – primed for imminent test-firing – had been moved from their launch site.

The step came as US and South Korean presidents prepared to hold a summit at the White House later Tuesday intended to send Pyongyang a strong signal of unity.

US sanctions ban any American individual, business or organisation from conducting transactions with a number of named entities in an effort to cut them off from international trade.

Dow Jones said the Bank of China did not provide further details in its statement and declined additional comment. The bank could not be reached for comment by AFP.